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Letterkenny Army Depot ………………… TABLE OF CONTENTS Table of Contents ………………………………………………………………………….. i List of Tables & Figures …………………………………………………………………... ii Executive Summary ……………………………………………………………………….. iii Introduction ………………………………………………………………………………... 1 A. Overview of Franklin County and Letterkenny Army Depot ………………….. 2 Letterkenny Army Depot and Responses to Realignment ………………… 2 Population Trends ………………………………………………………….. 6 Population and Population Growth …………………………………. 6 Age Composition of Franklin County Population ………………….. 6 Employment, Commuting, and Unemployment …………………………… 10 Total Employment and Employment Change ………………………. 10 Relationship of Employment to Population ………………………… 12 Employment and Commuting ………………………………………. 14 Unemployment ……………………………………………………… 15 Employment Composition ………………………………………………….. 17 Employment by Major Industry …………………………………….. 17 Industrial Composition ……………………………………………… 17 Employment Change: A Dynamic Shift-Share Analysis …………… 18 Income, Wages, and Earnings ……………………………………………... 23 Per Capita Personal Income ………………………………………… 23 Wages per Job ………………………………………………………. 27 Earnings by Employment and Industrial Sector ……………………. 31 Regional Context Summary and Implications …………………………….. 32 B. Modeling the Economic Impact of BRAC on Franklin County ………………... 34 Method …………………………………………………………………….... 34 Data Considerations ………………………………………………… 35 Estimated Impacts of Closure ……………………………………………… 35 Employment Impacts ……………………………………………….. 36 Gross Regional Product Impacts …………………………………… 36 Personal Income Impacts …………………………………………… 38 Demographic Impacts ………………………………………………. 39 Capital Stock Impacts ………………………………………………. 42 Other Impacts ……………………………………………………….. 43 C. Conclusions ………………………………………………………………………… 44 D. List of Sources …………………………………………………………………….. 45 i LIST OF TABLES & FIGURES Summary of Economic Impacts, 2005 ……………………………………………………………………….. iii Figure A-1: Letterkenny Army Depot in Relation to the Northeastern United States ………………………... 3 Figure A-2: Letterkenny Army Depot in Relation to Pennsylvania …………………………………………... 4 Figure A-3: Population of Franklin County, PA: 1969-2001 ………………………………………………….. 7 Figure A-4: Population: Cumulative Percentage Change, 1969-2001 8 Figure A-5: Differential Percentage of Population by Age Cohort, 2000: Franklin County vs. U.S.A. and Pennsylvania ……………………………………………………………………………………………………. 9 Table A-1: Employment Change, 1969/70 – 2000/01 – Correlation Coefficients …………………………….. 10 Table A-2: Employment Change, 1969/70 – 1996/97 – Correlation Coefficients …………………………….. 10 Figure A-6: Employment: Cumulative Percentage Change, 1969-2001 ………………………………………. 11 Figure A-7: Full and Part-Time Employment as a Percentage of Population, 1969-2001 ……………………. 13 Table A-3: Top 5 Geographic Locations of Residence of Workers Employed in Franklin County, 1990 & 2000 …………………………………………………………………………………………………………….. 14 Table A-4: Top 5 Geographic Locations of Work for Employed Residents of Franklin County, 1990 & 2000 15 Table A-5: Net Export of Employees from Franklin County, 1990 & 2000 …………………………………... 15 Figure A-8: Monthly Unemployment Rate (Unadjusted): Jan 1993 – Sep 2003 ……………………………… 16 Figure A-9: Employment by Major Industry (SIC): Franklin County, 1970-2000 19 Table A-6: Percentage of Employment by Major Industrial Sector (SIC), Franklin County, PA: 1970-2000 20 Table A-7: Location Quotients by Major Employment Sector (SIC) , Franklin County, PA: 1970-2000 21 Table A-8: Components of Employment Change: Dynamic Shift-Share Summary, Franklin County, PA: 1970—2000 …………………………………………………………………………………………………….. 22 Figure A-10: Per Capita Personal Income (Real), 1969-2001 ………………………………………………… 24 Figure A-11: Per Capita Personal Income (Real): Cumulative Percentage Change, 1969-2001 ……………… 25 Figure A-12: Per Capita Personal Income (Real): Percentage of U.S.A. Average, 1969-2001 ……………….. 26 Figure A-13: Wages per Job (Real), 1969-2001 ………………………………………………………………. 28 Figure A-14: Wages per Job (Real): Cumulative Percentage Change, 1969-2001 ……………………………. 29 Figure A-15: Wages per Job (Real): Percentage of U.S.A. Averages, 1969-2001 ……………………………. 30 Table A-9: Earnings per Employee by Industrial Sector: Franklin County, 2000 …………………………….. 31 Table B-1: Total Employment: Baseline vs. BRAC, 2005-2020 ……………………………………………… 36 Table B-2: Estimated Employment Changes Due To BRAC by Major Economic Sector, 2005-2020 ……….. 37 Table B-3: Gross Regional Product: Baseline vs. BRAC, 2005-2020 ………………………………………… 37 Table B-4: Estimated Impacts to Gross Regional Product Due to BRAC by Major Economic Sector, 2005- 2020 ……………………………………………………………………………………………………………... 38 Table B-5: Personal Income: Baseline vs. BRAC, 2005-2020 ………………………………………………… 38 Table B-6: Total Population: Baseline vs. BRAC, 2005-2020 ………………………………………………… 39 Table B-7: Total Labor Force: Baseline vs. BRAC, 2005-2020 ……………………………………………….. 39 Table B-8: Estimated Impacts on Population Due to BRAC: Total & by Age Cohort, 2005-2020 …………… 40 Table B-9: Estimated Impacts to the Labor Force Due to BRAC: Total & by Age Cohort, 2005-2020 ………. 41 Table B-10: Capital Stock – Residential: Baseline vs. BRAC, 2005-2020 ……………………………………. 42 Table B-11: Capital Stock – Non-Residential: Baseline vs. BRAC, 2005-2020 ………………………………. 42 Table B-12: Estimated Impacts to Capital Stocks Due to BRAC: Residential & Non-Residential, 2005-2020 . 42 ii EXECUTIVE SUMMARY Once again Letterkenny Army Depot is confronting the prospect of a base closure decision being issued in regard to Base Realignment and Closure (BRAC). This study documents the likely economic impact upon Franklin County if closure occurs. Though military value will be the primary selection criterion in the BRAC process, it is only reasonable that local employees and private firms, as well as their elected representatives, have legitimate concerns about the economic ramifications of closure. This study will serve to frame the local and regional discussions about the significance of the economic linkages between the base and the county’s economy. The Center for Land Use at Shippensburg University has provided the technical expertise for this study, utilizing a computerized regional model, REMI, to simulate the economic impacts of closure upon Franklin County. While closure would have broader, regional consequences as well, this study has defined the impact area as being only Franklin County. Closure impacts were measured and compared to a non-closure baseline forecast for variables related to employment, gross regional product and personal incomes for the period 2005 to 2020. The table below summarizes the major findings. Summary of Economic Impacts, 2005 Baseline Closure Difference Total Employment 66,303 64,042 -2,261 Gross Regional Product ($M) 4,491 4,350 -$141 M Personal Income ($M) 3,459 3,377 - $82 M Source: REMI The Table shows that in 2005, assuming closure: • County employment levels would decline by 2,261 jobs (or –3.4%) due to both direct and indirect adverse impacts • Gross Regional Product (GRP) would fall by $141 million (or –3.1%) due to the loss of base related expenditures and the local expenditure and consumption induced by base activity. • Personal income in the county would be reduced by $82 Million (or –2.4%) due to both direct and induced impacts Additional expected impacts due to closure include: • Demographic changes via out-migration of people in their most productive years, intensifying the trends toward a disproportionately “gray” population. iii • A continued shift of the industry and employment mix toward a greater percentage of relatively low wage jobs and the further loss of training opportunities which generate human capital and enhance employee productivity. • Both real per capita income and wages per job trends are likely to become more adverse for the county. Real per capita income has fallen from 94% to 84% of the national average, while wages per job have decreased from 90% to 76% of the national average, both over the 1969 to 2001 period. • Franklin County has become a greater net exporter of employees with 17,476 county residents having jobs outside the county in 2000, compared to 13,791 in 1990. • The county’s employment structure has become more service and retail oriented, with a large decline in federal civilian and manufacturing employment. Federal civilian employment has dropped from 12% to 2.8% of county employment in the last 30 years, while manufacturing jobs have fallen from nearly 29% to 19%. • The value of residential and non-residential capital stock (in real 1996 dollars) will fall by approximately $117 million and $30 million, respectively, within 15 years. This is nearly $150 million below the projected levels with no closure. Such findings are elaborated upon in the full report, together with a regional overview to provide context and an enhanced appreciation for Letterkenny Army Depot’s economic role within Franklin County. iv INTRODUCTION As partial fulfillment of the data analysis related to potential base closures under taken via the 2005 Base Realignment and Closure (BRAC05), this study was requested by Franklin County Area Development Corporation (FCADC) to address the scope and magnitude of economic impacts likely to occur if the Depot were to be closed. This study is a collaborative effort initiated by community and Depot leaders who have worked jointly and successfully in response to earlier rounds of BRAC. Shippensburg University’s Land Use Center, a regional outreach and consulting entity, has provided technical expertise and prepared the documentation. BRAC05 will attempt
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